Microsoft Q&A: Defining Lanes for Partners, OBC and MCS

The Microsoft Onboarding Center (OBC) has been controversial with partners since it was announced a year ago to help customers migrate mailboxes to Office 365. This year, the OBC goes further, with its hundreds of Microsoft employees migrating data and branching out to do migrations for other products, such as Enterprise Mobility Suite (EMS).

At this summer's Microsoft Worldwide Partner Conference, RCP sat down with John Case, a corporate vice president in the Microsoft Office division. Case is a key architect of many of Microsoft's partner initiatives around cloud. (See the upcoming October issue of RCP for another part of the Q&A with Case that covers the Cloud Solution Provider program.)

Here's what Case had to say about how he defines the lanes for partners, the OBC and Microsoft Consulting Services (MCS) as all three drive customer consumption of Microsoft cloud services. Questions and answers have been lightly edited for flow.

RCP: A lot of partners were concerned last year about the rollout of the OBC. At the time, part of Microsoft's argument to partners was that partners would still own the data migration opportunity. Now OBC is doing data migrations, and EMS deployments. A lot of partners have expressed concerns about where the boundaries are, and whether they're changing.Case: It's a good conversation, actually, and it's one we are happy to discuss and keep taking feedback on. We announced OBC this year, meaning our [fiscal] 2015 [which ended July 1]. It was a, "Hey, look, we're getting in the game here as far as deployment, and getting customers to a run state." We landed an offer [FastTrack] that could be spent either in our services or a partner's services to do data migration. We actually found consistently that we were able to do data migration very, very quickly and very, very cheaply. And customers [felt that] part of the service should be getting [them] up and running, including some degree of migration of [their] data. Mostly, that was about Exchange. More and more, we believe that customers have an expectation that if they're going to buy into Office 365, we need to get them to a certain point, a run state.

There are definitely partners who still want to know what the boundaries are. Most partners I talk to now are saying to me, "OK, great, you've taken something that was effectively a low-margin, commodity business -- data migration for e-mail -- and you're now productizing it as part of Office 365. We'll now be able to do it far, far more cheaply through your product team and engineering system than we're able to do customer by customer. And you hand the customer to me and I can go do any other integration or custom work, any other IP work, that needs to take place." So one of our goals is to make sure that every single customer is coming out of our Onboarding Center with a partner attached on record as taking it to the next stage of deployment and usage. We're getting them to a run state. Anything beyond that, I need the partner to help drive and push.

Absolutely, there's a [faction of partners] which says, "Hey, look, Microsoft, give us more clarity on what you're doing and where you're going." We gave [customers] a choice last year -- either you can spend your money on our services or a partner. Now we're actually doing both. We're putting money into the channel in the exact same way as last year, but it's an "and" as opposed to an "or." We'll get you migrated and onboarded, and we're going to land with you some seed money to spend with partners on getting the rest of your services up and running and migrated. We think the offer this year, while it takes a little more of the ground, we also think it's much more aggressive in terms of promoting partner services through financial investment.

"One of our goals is to make sure that every single customer is coming out of our Onboarding Center with a partner attached on record as taking it to the next stage of deployment and usage."

John Case, Corporate Vice President, Microsoft Office

How big is the OBC at this point?
We have a few hundred people working on this inside our engineering team. It's not a small team. It's hundreds of people, and they're in multiple regions around the world, and so they speak multiple languages. If you're a customer in the U.K., you're talking to a team in the U.K. that's doing onboarding. They don't go to a customer site. They do it from a specific facility in each of these markets.

There are thousands of customers this year. Basically every single customer over 150 seats was eligible for our Onboarding Center since September [2014]. Tens of thousands of customers have been eligible for that. All of them have experienced the OBC to some degree. Some of them just got a few calls and said, "We'll do this ourselves." Some of them got deep with one of our onboarding specialists and they said, "Well, we're going to work with this partner." And some of them went all the way through the end of the process.

When you look at the Office 365 opportunity, how much of it is over 150 seats?
It's different if you look at numbers of customers, or what we call tenants, versus numbers of seats. By numbers of tenants, we think more than 95 percent is under 150 seats, which is an important thing to say. There are thousands and thousands of customers out there that won't get directly managed by our Onboarding Center. When you look at some of the giant Office 365 deployments we've done, either with governments or large corporations, the seat numbers look much more balanced, it's much more even.

What should partners expect on the OBC/partner boundary in the future?
We want to make sure partners have a very active role in getting customers to using Office 365. We've realized we can be very efficient in getting their Active Directory sorted out and getting the initial deployment done. We can do that through a very strict set of patterns that we can roll through our Onboarding Center. But that's where we intend to be. We're not intending to go solve every customer problem and do integration and help people do custom systems and LOB [line-of-business] apps, and we're never going to get into any of that. And that's where all the partners are making their money today.

Good partners that do this tell us that for every $1 they sell in licensing, they might sell $8-$10 in services. The stuff in there that's pure data migration, they're generally not making margin on. They're generally losing money or not making money, but they sell it to sell the rest of the services. We think we can help them solve some of that profitability problem.

Is MCS staffing up at the same time to do more of that work, as well?
They do less and less what I would call commoditized deployment and more and more complex deployment. I look at MCS at the same level as an Avanade or an Accenture. There are always going to be enterprises that need heavy lifting, deep integration, custom work and custom IP. They [MCS] absolutely have a huge business now built on Office 365, but not any more than they were a year ago or two years ago. It's growing at the same rate as the business, is the way I think about it.